Trump agrees to strengthen South Korea's military arsenal

Pyongyang fired an intermediate-range Hwasong-12 over Japan early on Tuesday, which it said was a mere "curtain-raiser" for the North's "resolute countermeasures" against ongoing US-South Korean military drills.

But withdrawal from the agreement, experts say, could lead to large tariff increases on imported South Korean goods in the United States, as well as high tariffs for imported US goods in South Korea.

"The two leaders noted the need to strengthen the Republic of Korea's defense capabilities to counter provocations and threats from North Korea, and reached an agreement in principle to revise the "missile guideline" to the extent hoped by the South Korean side", South Korean news agency Yonhap quoted South Korean presidential spokesman Park Soo-hyun as saying.

The two leaders spoke in a phone call Friday. "President Moon and President Trump reaffirmed the importance of deterring North Korean provocations by applying the maximum sanctions and pressure on the North and of bringing the North to the negotiating table to achieve a peaceful resolution to the North Korean nuclear issue", Park said.

Under the bilateral pact last revised in 2012, South Korea is allowed to develop ballistic missiles with a range of up to 800 kilometers (500 miles) and a payload weight of up to 500 kilograms (1,100 pounds).

The latest step comes after a roller-coaster month of escalating tensions over North Korea.

North Korea defends its weapons programs as necessary to counter perceived USA aggression, such as recent air maneuvers with South Korean and Japanese jets. The North has undertaken a steady stream of missile tests, including launching a missile over Japan this week, an incident that drew strong condemnations from the United States and its allies, including South Korea.

In the 1990s, USA policymakers were keen to constrain the offensive capabilities of countries in northern Asia because it was believed this would dissuade North Korea from increasing its own defensive capabilities, Schuster said.

Mr. Lighthizer and other administration officials, including Peter Navarro, an economic adviser to the president, have long complained that many South Korean industries, especially the automotive sector, enjoy government protections that make it harder for American companies to compete.

U.S. Defense Secretary Jim Mattis told reporters Thursday that the Pentagon was working with Secretary of State Rex Tillerson, who is taking the lead, concerning North Korea.